UBS’s rogue trader trial

Blame the institution, not the individual

KWEKU ADOBOLI’S defence lawyer told a jury at Southwark Crown Court to blame the institution, not the individual, for alleged illicit trading activities that led to a $2.3bn loss at UBS last summer. The judge says evidence should override any assumptions about either.

A lengthy rebuttal followed the—in the words of defence counsel Charles Sherrard—“outrageous allegations” given by prosecutor Sasha Wass in her closing speech against Kweku Adoboli on November 9th. She had drawn comparisons between Mr Adoboli’s alleged crimes and those of a paedophile, rapist and murderer. Mr Sherrard countered that friends, family, and even former UBS colleagues consider the 32-year old Ghanaian-born ex-trader an honest, hard-working, intelligent and dependable man. He said Mr Adoboli is being held responsible for collective failures at UBS and within the banking industry.

Losing money for UBS is what brought him to face criminal charges, Mr Sherrard said. “Do you think he’d be here if he’d actually made profits? Do you think they would have trawled Mr Adoboli through an investigation? Do you think they would have notified the FSA?” he asked the jury. “When have they self-reported, in all the instances that would have got them into trouble?”

The “common factor” is the drive to make money for banks, putting “demand” on traders, like Mr Adoboli, to use any means possible to achieve that, Mr Sherrard argued. Mr Adoboli’s actions, he added, are no more than “learned behaviour”, developed following others’ conduct at UBS.

Mr Adoboli says he devised an accounting mechanism called the “umbrella”, also referred to as a “cash buffer”, to cover costs incurred on his former trading desk’s book. Ms Wass had alleged Mr Adoboli hid both his trading methods and his losses, and that “he lied, and he lied, and he lied about it.” Mr Sherrard said that “his motive was sound, his intentions appeared honourable, his work ethic impeccable”—and that he was open about his activities with colleagues, who were often complicit.

The prosecution had characterised Mr Adoboli as a gambler and an exception. “People like to cite the greed, arrogance, and recklessness of bankers,” Ms Wass had said. According to her, “the vast majority of bank workers are honest citizens who abide by the rules.” She had described Mr Adoboli’s “type of rogue behaviour” as “extremely unusual”, comparing him with Société Générale’s “rogue trader”Jérôme Kerviel, who lost the French bank €4.9 billion. She had called Mr Adoboli “arrogant”, motivated by his desire to be a star trader. “At age 28 he decided he knew better than the bank. He played by his own rules. None of this was done for the good of the bank or approval.” In contrast, for Mr Sherrard, “Kweku is the opposite of the banker: he is in essence a simple, humble, and gentle person.”

On Monday the judge began his summing up—the final stage in the trial before the jury is invited to make its verdicts. He urged its members to set aside negative perceptions they may have of banks and bankers, and to instead focus on the evidence presented. Mr Adoboli faces six criminal charges on two counts of fraud by abuse of position and four counts of false accounting.

Read our previous coverage of the trial:

Martingale gambler: Some gamblers double their bet after each loss and continue to do so until they eventually win—or run out of money. So allegedly did Kweku Adoboli

In my ideal world this guy would go free but lose his job. The bank should have had to show that it had reported rouge bankers in the past that had made them money, not lost it. If they had no such examples then it is pretty clear that they have a policy of heads we win, tails you go to jail. Of course, my ideal world overlooks a lot of what the defendant is alleged to have done.

A pity that what I think you will find the prosecutor actually said was that Adoboli was using a 'Confess and Avoid' strategy which she said was often used by defendants such as rapists etc etc. I do not think you will find that she compared fraud to paedophilia nor Adoboli to a rapist or murderer but this was, as I understood it, how the defence chose to 'interpret' her examples. Perhaps one man's 'outrageous allegations' are another's 'outrageous distortions'? Who is to say?

Perhaps the journalist at the court might like to confirm what was actually said by asking the prosecutor directly in order to get the facts straight?

I must be too far removed from litiigation but why, when the judge's instructions to the jury are to set aside negative perceptions of banks and bankers, both the prosecution and the defense are allowed to draw negative pictures of bankers and banks?

If the jury has to ignore perceptions, legal counsel should be restricted from drawing them.

I wonder if prosecutors ever consider that these kinds of over-the-top comparisons might be counterproductive. Unless she has shown that individual customers (not just UBS as a company) were harmed, the parallel is less than clear.